Originally posted by @John Thedford:
Originally posted by @Jay Hinrichs:
@John Thedford
I think much of this wholesaling is market specific IE were you have plethora of vacant and semi worthless homes. Wholesaling is much more prevalent than others also markets were EM deposits are traditionally very low.
I know in my deals around the country now banks and I think some HUD stuff they are finally asking for realistic deposits like 2 to 5k per deal.. that will thin the wholesaler ranks a little bit.. But it does not take REO agents long to figure out who can close and who can't that's why those that can actually close get the deals fed to them. The wholeslaers do best with FSBO and unsuspecting and naïve sellers...
"unsupecting sellers"...that says it all. Thank you. I would love to know what service a "wholesaler" could provide that a licensed agent could not. Now, what service could a licensed agent provide that a "wholesaler" could not?
John Thedford - As an unlicensed person who sells contracts as a part of my investment business there is nothing I could provide that a licensed agent could not. I have noticed that not a lot of agents are willing to deal with these properties unless they are acting as a principle in the transaction and specialize in distressed situations.
Many times these sellers want to be done with the house and would rather have a purchase and sale contract that a listing agreement. Either an agent or an unlicensed person can give them the Purchase and Sale agreement. Only the agent can list it. While giving an opportunity to a great agent to list the property might get the person the highest value for their home in a reasonable time, that is not always what the seller wants. On the other hand if an experienced investor OR agent get it under a purchase and sale agreement, the seller is getting what they want. They have a sale price and a closing date. That contract has value and can be sold.
In either situation it comes down to the experience of the unlicensed investor or the agent. An un-experienced investor OR agent can make mistakes that leave the property owner stuck with the property for much longer than expected.
I do have a problem with someone that has no Idea what they are doing getting a property under contract at a stupid price and wasting someones time. Everyone needs to get started somewhere, but experience and knowing the market goes a long way.
As an investor I create deals. I get properties under contract at great terms, and that has value. As a buyer I have rights. One of my rights unless I give it away is to assign the contract. I can purchase the house. I can also JV with another investor on the deal.
Over the past year I got three contracts that I had intended to assign and was unsuccessful in finding a buyer for the contract. When I get a property under contract, its at a price that I would buy it. Guess what. I purchased all three of those houses ANYWAY, On time and as promised. As a wholesaler my options are open. Can an agent go back and buy their own listing? (I don't know, I am not an Agent)
Does every deal go through? No. Most of them do. Not closing a deal is rare for me, and secondary to something that was discovered during the inspection. There are lot of listed properties that go expired with no buyer on a regular bases.
So back to the question. In general. A wholesaler provides a Purchase and Sale Agreement, while most agents are only willing to provide a listing agreement. The seller wants the house under contract, not listed. Agents can wholesale also. Agents can invest also.
Wholesalers that are good know most if not all the local cash buyers and the types of deals they are looking for. Unless an agent has intentionally made that part of their business they have not.
My thoughts at least.
